Will Obama push housing reform in SOTU? — Not expected this year, but momentum matters — Lew live from Davos

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WILL OBAMA PUSH HOUSING REFORM IN SOTU? — POLITICO’s Jon Prior and Kate Davidson preview the big speech next week: “President Obama will deliver his State of the Union address on Tuesday and in the world of finance there is one question that keeps popping up: Will he mention Fannie Mae and Freddie Mac? In August the president laid out his case for getting rid of the taxpayer-owned mortgage giants and putting in place a new housing finance system. But the administration has mostly been quiet since. Obama could change that by calling for an overhaul of the mortgage market Tuesday night.

“Industry leaders hope he does. ‘We would welcome the White House’s engagement in the GSE debate, particularly on the issue of bringing private capital back to the secondary mortgage market through ideas such as up front risk sharing,’ said Dave Stevens, head of the Mortgage Bankers Association. ‘On access to credit, the President has the ability to reinforce the objective that qualified, lower and middle class borrowers should not be disqualified from homeownership by the very rules that were supposed to protect them.’

NOT EXPECTED THIS YEAR BUT MOMENTUM MATTERS — “The issue isn’t whether Congress will enact legislation this year getting rid of Fannie and Freddie. That’s unlikely. But the further along legislative efforts get by year’s end the more likely an overhaul is to happen before Obama leaves the White House. For instance, Senate Banking leaders are trying to wrap up a bipartisan bill in the coming weeks that would stand as a counterpoint to the more conservative proposal advanced by House Financial Services Committee Republicans last year.

“The Senate plan being worked on more closely hews to the administration’s preference for how big of a role the government should continue to play in the mortgage market. A Treasury Department official said in a speech Wednesday that the administration is ‘intensively engaged’ with Senate Banking. But if Obama really wants to give the issue a boost he can give it the coveted SOTU mention.”

LEW LIVE FROM DAVOS — Treasury Secretary Jack Lew will be lives from Davos on CNBC’s Squawk Box around 6:45am EST … At 11:20am EST Secretary Lew will participate in a moderated conversation on the U.S. and global economy with The Wall Street Journal’s Gerard Baker. Web cast: http://wef.ch/live

LEW LETTER URGES FEBRUARY DEBT LIMIT HIKE — Secretary Lew’s new letter to Congress urging lawmakers to raise the debt limit by February saying he does “not foresee any reasonable scenario" in which extraordinary measures could last into March. Many on Wall Street and the CBO believe extraordinary measures could last longer but there is little certainty given the level of tax refunds the government pays out around this time of year before tax payments start coming in in April. Letter: http://1.usa.gov/19OPt2G

NEW TREASURY SECURITY — Treasury Assistant Secretary for Financial Markets Matt Rutherford writes in CNBC op-ed on FRNs — the first new Treasury security in 17 years: “With this new tool, Treasury will have additional flexibility to meet our goal of financing the government at the lowest cost over time. FRNs should also help expand Treasury's investor base by attracting new buyers who are looking for high quality, liquid, stable-value securities with a longer maturity date than Treasury currently offers through our weekly bill auctions.” http://cnb.cx/1hl3DYK

ROUHANI HITS DAVOS — Reuters/Davos: “Iranian President Hassan Rouhani said on Wednesday it was possible to turn more than three decades of enmity with the United States into friendship if both sides made an effort. He was speaking in a Swiss television interview after arriving at the World Economic … where he will court the global business community and meet a series of oil company executives on Thursday.

“Asked whether there could one day be a U.S. embassy again in Tehran instead of the Swiss embassy representing U.S. interests in Iran, the president told public RTS television: ‘No animosity lasts eternally, no friendship either lasts eternally. So we have to transform animosities into friendship.’ … Rouhani travelled to Davos to persuade foreign investors to return to his country, which has some of the world's biggest oil and gas resources and a market of 76 million people.” http://reut.rs/1muPFob

CHINESE MANUFACTURING DIPS — Bloomberg/Beijing: “Chinese manufacturing … showed a slowdown in January as output and orders cooled, with the gauge slipping to a level that signals a contraction. The preliminary reading of 49.6 for a Purchasing Managers’ Index … released today by HSBC Holdings Plc and Markit Economics, a six-month low, compares with a final figure of 50.5 in December and a 50.3 median estimate of 19 analysts in a Bloomberg News survey. A number above 50 indicates expansion. Asian stocks and the Australian dollar extended losses as the report showed domestic and global demand weakening, with new export orders shrinking." http://bloom.bg/1eTSyMq

LIMITED WINDOW FOR CONGRESS ON DEBT LIMIT — POLITICO’s Jake Sherman: “There’s not a ton of time. The House is out of session this week, and only in session for two and a half days next week. As of right now, there doesn’t appear to be a plan to lift the debt limit. … The debt limit is not the fiscal standoff it used to be. When Republicans first took the House, they demanded deep cuts to spending as a price for increasing the national borrowing limit. Last time they lifted the cap, they did it without concessions … Republicans will have time to discuss how they plan to lift the limit when they have their annual legislative retreat in Cambridge, Md., next week." http://politi.co/1eTDL4c

FIRST LOOK: VETERANS TO LAUNCH AD BUY — Per release going out this morning: “New ads produced by Concerned Veterans for America (CVA) blasts Congress for failing to address the nation’s dangerous $17 trillion debt and instead cutting pensions for military retirees. The 30-second ads — totaling $770,136 and entitled ‘Priorities’—will run statewide on TV and radio in Arkansas, on radio in Denver, Colorado, and online throughout the country for three weeks. The ads praise Rep. Tom Cotton (AR-4) and Rep. Mike Coffman (CO-6) for their principled stand in voting against the most recent budget deal."

FIRST LOOK II: LEFT PUSHES OBAMA ON MINIMUM WAGE — Per a petition being circulated today by Democracy for America: “Wouldn't it be great if President Obama could break some actual news at next Tuesday's address? … There is something President Obama could do right now to make life better for as many as two million low-wage workers — and there is nothing Republicans could do to stop it.

“With one executive order, President Obama has the power to give preferential treatment to federal contractors who pay higher wages, giving a de facto minimum wage increase to hundreds of thousands of workers … Tell President Obama to announce in next Tuesday's State of the Union speech that he is signing an executive order to raise the minimum wage for employees of federal contractors.”

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THE SUPER BOWL AIRPORT WRANGLER — Bloomberg’s Alan Levine reports: “New Jersey’s Teterboro Airport, one of the nation’s busiest for business aviation, along with Newark’s Liberty International and at least four smaller airports will be jammed with 1,200 private and charter planes flying in for the Super Bowl. Airport wrangler, Wayne Boggs’ job is to prevent post-game runway gridlock that can hold up CEOs and celebrities used to being whisked around on a whim. …

“Boggs’ team of 11 will be responsible for untangling aircrafts on the tarmac, which during the game will resemble the MetLife Stadium parking lot less than 2 miles away. At Teterboro, reservations for up to 600 plane parking spaces during the Super Bowl filled up before Christmas. The concrete tarmac of Newark Liberty International will hold planes worth more than $1 billion on game day. … In addition to being the “Air Boss”, Wayne Boggs also happens to be the brother of Wade Boggs.”

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES – Jon Prior on Treasury’s approach to an expansion of HARP. … To learn more about Pro's subscriber-only coverage – and to get Morning Money every day before 6 a.m. – please contact Pro Services at (703) 341-4600 or info@politicopro.com.

GOOD THURSDAY MORNING — Happy to see the Yankees break out the checkbook again for star Japanese pitcher Masahiro Tanaka who gets $155 million for seven years. Nice work if you can get it. http://nyti.ms/1f7VzLh

DRIVING THE DAY — Initial jobless claims at 8:30am expected to tick up slightly to 330K from 326K … Existing home sales at 10:00am expected to rise to 4.93M from 4.9M … Index of leading indicators at 10:00am expected to rise 0.2 percent … At Davos, Secretary Lew will meet with Financial Stability Board (FSB) to the International Monetary and Financial Committee Chairman and Bank of England Governor Mark Carney,among other meetings

TRANSITIONS: JENNIFER DUNN TO WELLS FARGO — Per release going out today: “Wells Fargo & Company has hired Jennifer Dunn to lead the company’s communications strategy and activities in support of its federal policy priorities. Dunn will be based in Washington, D.C. with Wells Fargo’s federal government relations team, led by Executive Vice President Anita B. Eoloff. …

“Most recently, Dunn led communications and public relations programs at Cisco … Dunn also served in senior communications positions with former U.S. Senators Christopher J. Dodd (D-CT) and Blanche L. Lincoln (D-AR)." Full release: http://bit.ly/1muXk5O

BEHIND EL-ERIAN DEPARTURE — FT’s Tom Braithwaite: “Long hours and a frequently fractious relationship with Pimco’s founder Bill Gross prompted Mohamed El-Erian’s resignation as chief executive of the world’s largest bond house, say people familiar … Mr El-Erian often sparred with the company’s founder over strategy, in a workplace that insiders say rivals any investment bank for fierce arguments and a hard-charging culture. … His resignation on Tuesday evening came as a shock to those both inside and outside of Pimco but his plan to leave had been known to a small group of senior executives for several months

“Mr El-Erian, whose day in the office starts about 4.15am in Newport Beach, California, told colleagues he wanted to write a book and spend more time with his family.

He said he was looking for a ‘third career’ after spending 15 years at the International Monetary Fund and 17 years in investment management, both at Pimco … and a two-year stint managing Harvard University’s endowment. The resignation was not related to Pimco’s recently lacklustre performance, the people said.” http://on.ft.com/1g2hS8e

GORMAN: BANKERS NOT AS DISTRUSTED AS CONGRESS — Morgan Stanley CEO James Gorman on Bloomberg Television from Davos asked why banks are the least trusted industry in the world: “I am told we are actually the second least. Fortunately, we have still got Congress. In all seriousness, this is the most damaging financial crisis since the Depression, maybe even well before that, with all of the home foreclosures, the bank failures, and the impact that that had on the global economy. It was devastating. It does take lot of time to recover their trust. That is not surprising.” http://bloom.bg/1ioBFim

OVERSEAS BANKS TO FACE US RULES — NYT’s Peter Eavis: “One of the biggest loopholes on Wall Street may soon close. More than three years ago, Congress passed a sweeping overhaul of the financial system that was supposed to leave no big bank untouched. Staggeringly, though, half of the large banks on Wall Street are able to avoid crucial parts of the overhaul — simply because they are foreign. In particular, the overseas banks — Barclays, Deutsche Bank and Credit Suisse among them — have not had to comply with parts of the overhaul … Now, however, the American authorities appear poised to snatch that advantage away. … The Fed … which regulates banks, is expected to complete rules soon that will force large foreign banks to abide by many of the requirements their American counterparts have had to operate under …

“The foreign banks are not pleased with the crackdown. The Fed first proposed the foreign bank rules at the end of 2012 and, as is its practice, invited the industry and the public to provide feedback. The Fed received strongly worded letters in opposition from a handful of large foreign lenders … In the face of such criticism, it is possible the Fed will end up substantially softening its rules. But senior executives at the foreign banks said they did not expect much in the way of dilution.” http://nyti.ms/1c5mOFL

TREASURY STILL WANTS HOUSING REFORM — FT’s Michael Mackenzie and Tracy Alloway: “Michael Stegman, counsellor to the secretary of the Treasury for housing finance policy, said while it was good news that Fannie Mae and Freddie Mac were generating large profits, it should not derail efforts to reform the “Government Sponsored Entities” that were taken into conservatorship in September 2008 … The GSEs have nearly paid back their $180bn bailout from the Treasury, thanks to the recovery in home prices since the financial crisis of 2008.

“That has fuelled talk that reform was not required at this time, particularly with midterm elections later this year dominating the agenda in Washington. Some stakeholders mistakenly argue that housing finance reform is no longer needed, that the GSE’s are so flush with cash … We could not disagree more.”

CREDIT SUISSE COULD FACE $800M U.S. FINE — WSJ’s John Letzing, Francesco Guerrera and David Enrich: “Talks between Credit Suisse Group … and U.S. authorities on settling allegations the Swiss bank helped Americans evade taxes have intensified, and a settlement of more than $800 million could be struck in the first half of the year, people familiar with the situation said.

“If the deal goes through, it would represent the biggest fine in the U.S. government's crackdown on offshore tax evasion in Switzerland. The discussions between Zurich-based Credit Suisse and the Justice Department are in early stages … Both people said any settlement would likely top the $780 million UBS AG … agreed to pay in 2009 to settle with the U.S.” http://on.wsj.com/1cXe7ZZ

ALSO FOR YOUR RADAR —

GSELEVATOR GETS A BOOK DEAL — FT’s Tracy Alloway: “What is good news for Kate Upton, Vanilla Ice and Bette Midler might make grim reading for Goldman Sachs executives as the anonymous author behind the@GSElevator Twitter profile has agreed a deal to turn his allegedly insider observations into a tell-all book about life at the bank. Tentatively entitled ‘Straight to Hell: True Tales of Deviance and Excess in the World of Investment Banking,; the book is due for an October 2014 publication …

“[A]ccording to its anonymous author [the book] is intended to be ‘the definitive exposure of investment banking culture . . . shedding new light on a world that is far more abhorrent, and yet, way more entertaining than people can imagine.’ … @GSElevator has … attracted more than 600,000 followers on the social media network, dwarfing the number of followers of Goldman's own official profile.” http://cnb.cx/1jnLhtO

ICBA RIPS RETAILERS ON TARGET BREACH — Per release: “The Independent Community Bankers of America … expressed its shock and outrage at a National Retail Federation (NRF) letter blaming the financial services industry for recent data breaches at retailers such as Target and Neiman Marcus. ‘The NRF should focus its attention on responding to the harm that security breaches at several retailers have done to consumers and their financial institutions rather than hurling false allegations blaming the banking industry for these retail breaches,’ ICBA President and CEO Camden R. Fine said.’”

NAFCU WANTS DATA SECURITY STANDARDS — Per letter from the National Association of Federal Credit Unions to congressional leaders: “The breadth and scope of the massive Target Corporation breach exemplifies the need for Congressional action. … I write today to continue to urge you and your colleagues to act on federal data security and breach notification standards. As noted by a retailer trade group in a letter earlier this week, there is agreement among many industry stakeholders that federal breach notification laws are desperately needed to keep consumers safe.”

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